Sarah Ketterer (Trades, Portfolio) is CEO of Causeway Capital Management LLC, an investment firm with $28 billion in assets. She joins two members of her team, Causeway portfolio managers Jamie Doyle and Conor Muldoon, for a Question & Answer session with GuruFocus readers. To submit a question to them about anything related to investing, simply post it in the comments section below.

About Sarah and Causeway

Sarah and the team at Causeway focus primarily on companies in international and emerging markets, employing a time-tested bottom-up value approach. The firm’s flagship fund has returned an annualized 8.4% since its October 2001 inception, and the global value equity strategy has returned an annualized 12%, both beating their benchmark index.

Causeway combines rigorous fundamental research with quantitative analysis when evaluating stocks. Their researchers find investment ideas by poring over global stocks markets, and value stocks based on the companies’ yield and ability to profitably reinvest back into the company. As contrarian investors, they seek out-of-favor sectors and companies that face temporary setbacks.

Global Approach and Current Investing

Causeway invests across several geographic strategies, including global (developed markets including the U.S.), international (non-U.S. developed market equities) and emerging markets. Their team explained why they are enthusiastic about investing without borders in their January newsletter, “Beyond Boundaries: The Case for Global Equity:”

“We recognized the benefits of screening globally for undervaluation among the world's best-run companies. The developed global investable universe is comprised of over twice the number of companies in the developed international universe. As a result, global has the potential to deliver significant performance advantages versus international.”

Causeway is also heavily invested in financial stocks, increasing exposure significantly in 2013. They chose bank stocks they identified as being undervalued and undergoing restructuring or deleveraging. Some of their biggest bank positions include JPMorgan Chase & Co (NYSE:JPM) – a new fourth quarter holding – Citigroup Inc. (NYSE:C) and Wells Fargo (NYSE:WFC).

As of the fourth quarter, some of Causeway’s largest positions are Ryanair Holdings PLC (NASDAQ:RYAAY), UnitedHealth Group Inc. (NYSE:UNH) and Boeing Co. (NYSE:BA). Within their International Value portfolio, which GuruFocus follows separately, the largest positions are Akzo Nobel NV (XAMS:AKZA), Reed Elsevier NV (XAMS:REN) and Siemens AG (FRA:SIE).

Asking a Question

To ask Sarah, Jamie and Conor a question about investing, post it as a comment in the box below. We’ll gather questions and get the answers back to you shortly.

Comments

Thank you for taking our questions. I have a two-part question: (1) How did your global portfolio position strategy change each time the Fed has announced a new round of QE and (2) How would you position your global portfolio in anticipation of the eventual wind-down of QE?

Dear Sarah,
what do you think about Medusa Mining Ltd? Due to my analysis its undervalued and markets are significantly overvalued. Is it the right time to invest into gold, especially Medusa Mining Ltd in your opinion?

I have a very simple (yet not simple) question. As a 24 year old, I have a lot of time to allow for compounding. If you had to pick one or two smaller companies to buy and hold for the next 5-10 (or longer) years. What would they be?

Hi Sarah; Could you please give me a company that is global in nature that you really feel has "disruptive" technology for the next decade that could be a real "game changer" and a great investment?? Thank You very much. Chuck Petersen

As a contrarian investor, what are the key indicators your company look for on stocks that have been discarded by other so called experts and picked by you? I typically don't follow numbers or parameters and decide to invest on stocks at or near 52 weeks low. So far I've been blessed with stocks such as ARIA, OXGN, and I have hope in Groupon only because I think their business model is improving and have plenty of upside potential. In other words, I trade by gut feeling and I'd like to learn more about real signs. Thanks in advance for taking our questions.

1. Which aspect of value investing do you place a greater emphasis on - projecting future earnings or calculating the respective company's present value if liquidated (since some of the companies are in ' out-of-favor sectors' and those which face 'temporary setbacks').

2. Do you think that US Equities are reaching a saturation point/significantly overvalued as Seth Klarman (Trades, Portfolio) believes it to be so? If not, why?

3. Could you give a broad overview of your investment process/checklist which you use when first looking at a company?

I have a two questions. The first being how do you allocate your global portfolio regarding position sizes . . . Do you allocate strictly from a bottoms up perspective or do you have a certain threshold for each geographic area that must be met (or limited) in terms of percentage of the portfolio?

The second question is what do you think of the prospects for Africa and the Middle East in the next 20+ years? How to you evaluate the financial statements and verify the companies are legitimate in the "questionable" geographic regions? It seems most western investors neglect these geographic areas but I could see tremendous value being created over the coming decades, especially in the agriculture and energy industries. I would love to hear what you have to say!

PostNL has been discussed on gurufous.com after your fund disclosed its stake. I have two questions regarding this company.

1) It seems the Dutch postal service (net of the TNT stake and the international operations) is not performng as well as the Austrian postal service and the Belgian postal service. Do you see any reasons why the Dutch postal service should be inherently less profitable than some of their publicly traded European peers?

2) A number of European postal services have been IPOed recently. Do you see any drivers for consolidation in the space?

And finally a question about Rolls-Royce plc.

3) What (if any) competitive advantages does Rolls-Royce have over GE and Pratt & Whitney?

Thank you for taking time to respond to these questions. Regarding China and Brazil: the energy sector, in particular oil/gas, has been under a lot of pressure. Stocks like CEO, PBR and PTR seem to be in oversold territory. Do you see more pain ahead with growth concerns and government intervention like with CEO or do you this as a good entry point for a long-term investor like myself?

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What do you think are the fundamental aspects for oil services companies going into 2015/2016. I heard that there is low visibility in capex spending among the integrated oil companies which will affect the industry? Despite the low valuations in Noble Corp and Transocean, do you view that as bear traps or good opportunities right now? Thank you.

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